BITCOIN BOX SCORE
Market Capitalization: $663.4B
Hash Rate (90 days): 408.3 EH/s
Transactions (30 days): 8,751,232
Network Fees (day): 9 sat/vB
Bitcoin Dominance: 54.06%
If you followed financial news these past few weeks, you noticed how bullish everyone is on the imminent approval of spot bitcoin ETFs.
There are two sides to this. On the one hand, it could spark more interest and drive up the price of BTC.
However, it's important to remember that bitcoin is more revolutionary than Wall Street can admit since their spot ETF product isn't real bitcoin. And bitcoin itself competes with what Wall Street seeks to do, which is to preserve and grow wealth.
Wall Street's pitching bitcoin as a new "asset class" only scratches the surface. It isn't just going to make you money. It is the money.
Spot Bitcoin ETFs are not a decentralized, censorship-resistant digital bearer asset.
With that, let's dive into the news.
FinCEN attacks financial privacy 🚨
The U.S. Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has proposed labeling Bitcoin and crypto mixers, which provide anonymity in transactions, as a "primary money laundering concern" to combat illicit finance and terrorism, citing groups that have benefited from anonymous funds.
If approved after a 90-day public comment period and subsequent review, U.S. financial firms could face restrictions such as increased due diligence or prohibitions on account maintenance when interacting with mixers.
American regulators believe that the U.S. dominates innovation and appear unaware of competition from other countries. They should expect firms to relocate if rules like this one come to pass.
Tether announces real-time reserve data 🔐
Tether, the issuer of USDT, the largest dollar-pegged stablecoin, is planning to publish real-time data on its reserves, although it has yet to set a specific deadline for achieving this goal. USDT usage has grown substantially, boasting a market capitalization of $83.9 billion and over $30 billion daily trade volume.
A few years ago, economists compared stablecoin issuers to 19th-century "wildcat" banks that circulated private notes and were allegedly riskier than regulated institutions. Yet, Tether's decision to publish real-time reserve data allows consumers to evaluate issuer risk and make more informed decisions.
Expect more stablecoin issuers and bitcoin firms to adopt such Proof-of-Reserves models, which pressure traditional finance and their regulators and academic defenders to explain why they aren't doing the same.
Bitcoin pumps, bonds dump 🚀
Bitcoin's price surged significantly this week, mainly due to a gamma squeeze in the options market, where entities selling call options amid growing anticipation for spot ETF approvals created a buying frenzy, pushing the price beyond $35,000. All this occurred in the face of downward trends in other markets. This episode highlighted the tight supply dynamics and promising price action if large inflows continue.
Narrative violations abound
Bitcoin is up, bonds are down – Those who live and die by the traditional 60/40 stock-to-bond portfolio must be asking themselves, who is the risk-free asset now?
The FED has its eyes on… climate change 🤡
Amid persistent inflation and geopolitical tensions, the Federal Reserve has instructed banks to prioritize managing climate-related risks. This move aims to align lending practices with transitioning to a lower-carbon economy.
Critics argue that this approach is speculative and lacks clarity in defining extreme scenarios. It could divert attention and resources from immediate financial risks while subtly pressuring banks to reduce fossil fuel financing.
Even Gen Z cares more about inflation than climate change
Recent survey data confirms Gen Z is more fearful about rising prices than the downstream consequences of weather changes.
Given this, it would make sense for the Fed to keep inflation front and center and avoid policies that could increase the price of oil, a key inflationary pressure. Yet they are doing the opposite.
HOW BITCOIN WORKS
Learn one key idea about bitcoin each week. This week:
Bitcoin is neutral
Since the 1944 Bretton Woods Agreement, the U.S. dollar has played a critical role in international trade by leveraging America's economic, military, and technological power. However, there are consequences to this dominance, as evidenced by skyrocketing public debt and unfunded liabilities.
The dollar's preeminent position has led to an insatiable appetite for sovereign debt, creating an equilibrium – but one that relies on absolute confidence in the U.S. economy.
Despite its shift away from gold backing in 1971, the U.S. dollar has maintained global dominance due to the United States’ economy, productive capacity, and relatively low corruption.
However, there has been a gradual decline in the dollar's dominance as emerging currencies and alternative trade settlements have begun to challenge its supremacy in global reserves.
The global financial landscape is changing, with nations like India settling trades in rupees and other countries seeking to reduce their dollar dependence. The emergence of the Chinese yuan, the increasing use of regional currencies, and the BRICS nations exploring a dollar alternative all signify a shift in the balance of power.
Amidst these changes, bitcoin stands out as a neutral monetary system, unaffected by national policies and immune to weaponization. Unlike the dollar, bitcoin is decentralized. Governments and central authorities cannot influence it, making it a neutral exchange method. Bitcoin is free from political biases and offers a fair and impartial transaction option.
As central banks and financial institutions turn away from the dollar toward alternatives, it's clear that the world seeks stable and neutral money. With its fixed principles and decentralized structure, bitcoin represents a future where money is no longer a tool for power but a means for fair and equitable transactions.
That’s all for this week, folks! When you signed up for this newsletter, we promised to act as your personal guide and help you understand what’s happening in the world of bitcoin. What did you think of today’s newsletter? Reply to this email and let us know what you’d like to see more of.